The City of Yellowknife has formally rejected a private developer’s request for hundreds of thousands of dollars in municipal funding to help open a 72-unit housing block.
Borealis Developments says The Nest, a downtown office block the company transformed into housing, must have a fire hydrant vault otherwise it will not meet regulatory requirements and cannot open.
Borealis and the city have been at odds over precisely when the developer knew a hydrant vault was a requirement, how the need for the vault was set out, and who should be responsible for fixing the absence of such a vault with the rest of the redevelopment work complete.
On Monday, after multiple meetings on the issue this summer, city council firmly decided the error lay at Borealis’ door and taxpayer money should not help the developer out of its hole.
Borealis had said installing a vault could cost $750,000 and had asked for the city to pay for most of that, saying it had no means of securing the money from other sources.
Advertisement.
Advertisement.
City council unanimously voted to reject that request.
The wind had been blowing in that direction for some time, and councillors appeared deeply skeptical at the end of the last public briefing on the issue.
Borealis had sought to turn the situation around by sending a last-ditch letter to council and making a further presentation on Monday.
Among other arguments, Borealis said the hydrant vault would be shared infrastructure on which multiple buildings could rely, and argued the company had paid hundreds of thousands of dollars in tax while repurposing the vacant former Bellanca office building, compared to a projected tax bill of just $12,000 had the firm been building an apartment block from scratch.
Advertisement.
Advertisement.
All of that extra tax money could have been used to help pay for a hydrant vault, the company said. Borealis maintains it was advised by city officials at multiple stages that no hydrant vault was required. In its letter, the company says that changed only at a “very late stage.”
Councillors haven’t been prepared to buy that argument.
Throughout, multiple councillors have said their own understanding suggests the requirement ought to have been obvious much sooner in the process, and other developers in the city have known about it and abided by it without the need for City Hall’s intervention.
Rob Warburton said the money Borealis sought represented almost two percentage points of the city’s annual budget.
”This is really hard. I obviously support housing in the city [but] this was a miss. Someone, somewhere within this development project missed this, and that is horribly sad,” Warburton said.
Warburton’s council colleague, Cat McGurk, said: “I don’t appreciate the feeling that council is being held hostage. The developer has either wilfully chosen to push something off to the side or has received bad advice.”
Garett Cochrane said he was “incredibly uncomfortable” creating the precedent that private developers could come to the city for money in this scenario, while Mayor Ben Hendriksen said the rules on hydrant vaults “seem to have been known or, if they weren’t known, were well-documented” and other developers seemed to be aware of them.
”I can’t support Yellowknifers’ money paying for a known development requirement,” Hendriksen said.
Advertisement.
Advertisement.
Bemoaning that council learned of the issue “far too late to take meaningful action,” the mayor said there was nonetheless a broader concern that councillors should study in the months ahead.
”Our systems are frankly modelled for new developments, not redevelopments and revitalization, which we need,” he said. Both Hendriksen and Cochrane suggested current municipal and territorial rules don’t give council many good options in a situation like this.
”We must review the issue from that perspective, not this individual case,” said Hendriksen.
“I look forward to starting those additional conversations on broader pieces in the coming weeks and months.”
What Monday’s decision means for The Nest’s future is not clear.
Scott Parker, a lawyer representing Borealis, allowed that his client could feasibly search for other sources of funding to cover the hydrant vault’s cost.
But Parker stressed that Borealis had found financing hard enough to secure in the first place, never mind for such a large additional investment.
At an earlier meeting, Parker had said he was not sure what a council “no” vote would mean for when The Nest and its 72 units would open, if at all.
